By OKEY ONYEWEAKU
Amidst continuing headwinds in the economic arena, Zenith Bank, United Bank for Africa (UBA) and GT Holding company have delivered strong and superior performances for the year end December 31, 2021, Business Hallmark has learnt.
According to the results which have begun trickling in, while UBA recorded a whooping increase of 20 per cent in profit before tax showing, Zenith Bank also delivered an equally impressive 10 percent growth in profit at the end of business year 2021. On the flip side while GT Holding company also showcased strong profits, it however declined marginally by 6.97 per cent. These results show that the tier 1 banks are stoic and moved against the head and tail winds to create value and wealth for their owners.
Zenith Bank Plc announced an impressive result for the year ended December 31, 2021, recording a double-digit growth of 10% in gross earnings which rose to N765.6 billion from N696.5 billion reported in the previous year. This is despite a challenging macroeconomic environment aggravated by the Corona virus (COVID-19) pandemic.
According to the bank’s audited financial results for the 2021 financial year presented to the Nigeria Exchange Group (NGX), the Group achieved year-on-year (YoY) growth in gross earnings of 10% from NGN696.5 billion reported in the previous year to N765.6billion.
This was on the back of 23% YoY growth in non-interest income from N251.7billion to N309billion and a 2% YoY growth in interest income from N420.8billion to NGN427.6billion.
Profit before tax also grew by 10% from NGN255.9 billion to NGN280.4 billion in the current year. The increase was due to growth in the top-line and very strong management of the treasury portfolio that increased efficiency, resulting in a drop in interest expense by 12% from NGN121.1 billion in 2020 to NGN106.8 billion in the current year. This further led to a 7% increase in net interest income of NGN320.8 billion in 2021 from NGN299.7 billion in 2020.
Customer deposits increased by 21%, growing from NGN5.34 trillion in the previous year to NGN6.47 trillion in the current year. The growth in customer deposits came from both corporate and retail customers. Retail deposits grew by NGN146 billion from NGN1.72 trillion in 2020 to NGN1.87 trillion in 2021. The Group’s continuous drive for retail deposits combined with the strategic rebalancing of its funding base helped to reduce the cost of funding from 2.1% to 1.5% in the current year. Although operating expenses grew by 13% YoY, growth remains below the inflation rate, and the Group improved its Earnings per Share (EPS) which grew by 6% from NGN7.34 to NGN7.78.
Total assets increased by 11%, growing from NGN8.48 trillion in 2020 to NGN9.45 trillion in 2021, mainly driven by growth in customer deposits. With the steady recovery in economic activities, the Group prudently grew its gross loans by 20%, from NGN2.9 trillion in 2020 to NGN3.5 trillion in 2021, with moderated NPL ratio from 4.29% to 4.19% YoY. The Group recorded impressive liquidity and capital adequacy ratios of 71.6% and 21.0%, which remained above regulatory thresholds of 30% and 15%, respectively.
Sources say that in 2022, the Group intends to consolidate on the gains achieved in the previous year in all business segments and combine leadership in the industry, innovation and technology to drive improved performance and deliver enhanced returns to all stakeholders.
As a testament to its commitment to its shareholders, the bank has presently announced a proposed final dividend payout of N2.80 per share, bringing the total dividend to N3.10 per share.
Zenith Bank has continued to distinguish itself in the Nigerian financial services industry through superior service offerings, unique customer experience and sound financial indices. The bank remains a clear leader in the digital space with several firsts in deploying innovative products, solutions and an assortment of alternative channels that ensure convenience, speed and safety of transactions.
In recognition of its track record of excellent performance, Zenith Bank was voted as Best Commercial Bank in Nigeria in the World Finance Banking Awards 2021, Best Bank in Nigeria in the Global Finance World’s Best Banks Awards 2020 and 2021, Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020, and Best in Corporate Governance ‘Financial Services’ Africa 2020 and 2021 by the Ethical Boardroom.
Also, the bank emerged as the Most Valuable Banking Brand in Nigeria in the Banker Magazine Top 500 Banking Brands 2020 and 2021, Number One Bank in Nigeria by Tier-1 Capital in the “2021 Top 1000 World Banks” Ranking by The Banker Magazine and the Retail Bank of the year at the BusinessDay Banks and Other Financial Institutions (BOFI) Awards 2020 and 2021.
Similarly, Zenith Bank was honoured as Bank of the Decade (People’s Choice) at the ThisDay Awards 2020 and emerged winner in four categories at the Sustainability, Enterprise, and Responsibility (SERAS) Awards 2021, carting home the awards for “Best Company in Reporting and Transparency”, “Best Company in Infrastructure Development”, “Best Company in Gender Equality and Women Empowerment”, and the coveted “Most Responsible Organisation in Africa.
UBA has surpassed industry expectations with its 2021 financial results demonstrating solid vigour for the year ended December 31. The result which was released on March 4, 2022 showed that gross earnings rose significantly to N660.2 billion representing an increase of 7 percent compared to N616.8 billion recorded at the end of the 2020 financial year.
Total assets grew by 11 percent to an unprecedented N8.5 trillion in the year under review, up from N7.7 trillion in 2020, thus marking the first time the Banks assets will cross the N8 trillion mark.
Despite the huge challenging business and slow economic recovery in most of its countries of operations, UBAs Profit Before Tax was impressive with a 20.3 percent growth to N153.1 billion, compared to N127.3 billion at the end of the 2020 financial year; while Profit After Tax rose grew by 8.7 percent to N118.7 billion in 2021, compared to N109.2 billion recorded the previous year.
Similarly, net loans grew by 7.7 percent to N2.8 trillion, whilst customer deposits rose by 12.2 percent to N6.4 trillion, compared to N5.7 trillion in the corresponding period of 2020, reflecting increased customer confidence, enhanced customer experience, successes from the ongoing business transformation programme and the deepening of its retail banking franchise.
In the year under consideration, the banks operating income rose by 10% to N443 billion compared to N403 billion in the prior year, whereas operating expenses closed the period at N279 billion.
In its usual tradition of rewarding shareholders, the Bank proposed a final dividend of 80 kobo for every ordinary share of 50 kobo for the financial year ended December 31, 2021. The final dividend which is subject to the affirmation of the shareholders at its Annual General Meeting will bring the total dividend for the year to N1 as the Bank had paid an interim dividend of 20kobo earlier in the year.
Commenting on the result, the Group Managing Director/CEO, Kennedy Uzoka, said that notwithstanding the tight and challenging operating environment, UBA continues to deliver significant performance:
The year 2021 can best be described as a year of global recovery; economies around the world began to witness early-stage recoveries, as supply chains recover from the devastating disruptions suffered in 2020.
Consequently, UBA recorded remarkable 7% growth in top line to N660 billion (USD1.56bn), and profit before tax (PBT) of N153.1 billion, up 20.3% from the prior year. Net Loans and advances grew by 7.7% to N2.8 trillion with exposure mostly to resilient economic sectors including oil & gas, agriculture and manufacturing. Deposit from customers grew 12.2%, crossing the N6 trillion mark, to N6.4trillion.
The GMD also explained that the quality of UBAs portfolio as well as the strength of the banks credit risk management frameworks and policies remain the bedrock of the positive results that the bank has been recording over the years, adding that the current performance highlights UBAs relentless customer focus, and leverage on its key strategic levers — People, Process and Technology.
Looking forward, I am particularly excited about our ongoing Enterprise Transformation Program which is designed to enhance the banks process agility, service delivery and customer experience. We are also making sizeable investments in cutting-edge technology and cyber security, to keep our innovative digital banking offerings above the curve, as we tool and re-tool our human resources to compete and win in a rapidly changing and evolving landscape. This will ensure the bank continues to achieve respectable top and bottom-line growth through the medium to long term, the GMD stated.
UBAs Group Chief Financial Official, Ugo Nwaghodoh, who corroborated the GMDs comments, said, once again, the bank has shown resilience. It achieved sizeable growth and strengthened its balance sheet despite the slow pace of economic recovery that characterised the year 2021.
Through active and diligent assets and liabilities management, the bank was able to protect its net interest margin and achieved a downward moderation of Cost of funds (CoF) by 70 basis points to 2.2% from 2.9% in the prior year.
According to him, the groups capital adequacy ratio at 24.9% was well above the required regulatory minimum and reflects a strong capacity for business growth. The Groups non-performing loan ratio improved further to 3.6% from 4.7% at the end of 2020. This testifies to the quality of UBAs loan portfolio even as the bank remains relentless in its resolve to drive down the Cost-to-Income ratio, which stood at 63.0% at the end of the year.
Nwaghodoh added that the bank achieved further strides in growing its business and gaining market share across its pan-African operations, with the region accounting for 63.2% of the Groups profitability, compared to 55.4% in 2020; Loans and advances as well as Deposit in the region were also up 14.5% and 27.3% respectively from a year earlier.
In his concluding remarks, the CFO stated We recognise the changing competitive landscape and are proactively positioning to consistently deliver on our strategic objectives and commitment to shareholders.
United Bank for Africa Plc is Africas global bank, offering banking services to more than twenty-five million customers, across over 1,000 business offices and customer touch points in 20 African countries. With a presence in the United States of America, the United Kingdom and France and more recently the United Arab Emirates, UBA is connecting people and businesses across Africa through retail; commercial and corporate banking; innovative cross-border payments and remittances; trade finance and ancillary banking services.
GTCO has posted gross earnings of N447.810billion in 2021, representing a marginal decline by 1.62% against the N455.229billion posted in year 2020.
According to the banks audited results for the year ended December 31, 2021, its income tax expense rose by 27.2% from N36.6bn in 2020 to N46.6bn in 2021, while its profit before tax declined 6.97% from N238.09billion in 2020 to N221.49billion in 2021
While the holding company paid a dividend of N3.00 for the year 2021, its earnings per share declined 13.6% from 711 kobo in 2020 to 614k in 2021.
After listing at the stock exchange in 1996, it was the first Nigerian financial institution to undertake a US$350million $ Eurobond issue and a US$750million Global Depository Receipts (GDR) offer. The listing of the GDRs on the London Stock Exchange in July 2007 made the bank the first Nigerian Company and African Bank to attain such a landmark achievement.
G T Bank is one of the blue-chip companies on the Nigerian Stock Exchange. Many have earned a living by investing in the banks shares. The bank has been generous to its loyal shareholders with impressive dividends payouts.
It paid 28kobo in 2001; 75kobo in 2002; 95kobo in 2003; 70kobo in 2004; 45kobo in 2005; 70kobo in 2006; 75kobo in 2007; 70kobo in 2008; 100kobo in 2009 and 75kobo in 2010 in addition to a bonus of 1 for 4. The bank also paid 125 kobo in 2011, 155kobo in 2012, 170 kobo in 2013, 175 kobo in 2014, 177 kobo in 2015, 177 kobo in 2016, 205 kobo in 2017, 270 kobo in 2018, 275 kobo in 2019 and 280 kobo in 2020 and 300kobo in 2021.
But the banks continuous profit decline in the three quarters of 2021and the loss of its leadership position in the price of stock to Zenith bank may be raising some eyebrows. Financial sector watchers appear to be asking questions regarding the development. In fact, after the wonderful performance of the years leading to 2020, GT Bank though still making good profit, is seemingly now on the decline as evidenced in the outcome of its numbers in almost all the quarters of 2021.
Analysts believe the banks have posted impressive results amid the difficult operating environment which has particularly been affected by negative headwinds like the Covid-19 pandemic and widespread insecurity that posed some form of setback for businesses in the last two years.